The European Commission Monday approved the $12.5 billion proposed acquisition by Google Inc (GOOG: Quote) of smartphones and tablet maker Motorola Mobility Inc. (MMI: Quote).
The Commission said it cleared the deal believing the merger would not drastically alter the market pertaining to operating systems and related patents. Nevertheless, the Commission's approval was tinged with a warning that the two companies refrain from using certain patents to sue each other.
Google now awaits approval from regulators in the U.S., as also from countries including China to proceed further in the matter.
Joaquín Almunia, European Commission Vice President in charge of competition policy, said the Commission will continue to assess the behavior of all market players in the sector, mainly the rising strategic use of patents.
According to the Commission, all smartphones need to adhere to certain telecommunications standards such as 3G or 4G/LTE. The standard setting require the holders of essential patents to license these patents to any interested third parties on fair reasonable and non-discriminatory, or FRAND terms. It said that Motorola holds patents that are essential for these standards to operate.
Google last August agreed to buy Motorola Mobility for $40 per share in cash, or a total of about $12.5 billion. The deal, which has the unanimous approval of the boards of both companies, is expected to close early next year.
Motorola Mobility has about 17,000 patents in its quiver, and with the acquisition, Google expects to boost competition in mobile computing given that Motorola Mobility has been a dedicated Android partner in developing innovative Android-powered devices.
Motorola Mobility will remain a licensee of Android, which will remain open. Google earlier said it will run Motorola Mobility as a separate unit following the closure of the deal.
Motorola Mobility was created when Motorola, Inc. was split into two independent and separately traded public companies.
The proposed deal is a boost to Google after it lost out on the deal to acquire the 6,000 patents of Nortel Networks Corp. (NRTLQ.OB). A consortium including Apple Inc. (AAPL), Microsoft Corp. (MSFT), Research In Motion (RIM, RIM.TO), and Sony Corp. (SNE), snapped the deal for $4.5 billion, eliminating Google's modest $900 million offer.
Google initially bid $30 per share for Motorola Mobility on August 1, later raised its offer price to $37 and finally settled at $40 per share, in a span of two weeks, after it lost out on the Nortel patent deal.
GOOG is trading at $612.74, up $6.83 or 1.13%, on a volume of 1.3 million shares.
MMI is trading at $39.61, up $0.16 or 0.41%, on a volume of 14.2 million shares on the NYSE.
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by RTT Staff Writer
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